In retail banking, one of the major tasks facing banking institutions is the processing of paper checks. As customers present checks to their own bank institution for deposit, it is the responsibility of the bank to “clear” the check prior to depositing the money represented by the check into the customer's account. If the check is written against an account within the same banking institution, it is known as an “on-us” check, and the process of clearing the check is straightforward. The account against which the check is drawn is debited for the amount of the check and the funds are transferred to the account of the customer that presented the check.
A more common occurrence is that the check is drawn against a different bank (the “drawee bank”) and the customer's bank must communicate the presentment of the check to the drawee bank in order to receive the funds for its customer. Historically, this communication was accomplished by the bank, at the end of each business day, by dividing all of the presented checks into bundles for each separate drawee bank. The bundles were shipped to the respective drawee banks, along with a cover letter known as a Cash Letter. The Cash Letter contained a summary of the checks contained in the shipment and represented the dollar value of the checks that the customer's bank expected from the drawee bank. As is readily appreciated, this manual process was very time consuming and resulted in the funds not being deposited into the customer's account for seven to ten days.
The Expedited Funds Availability Act of 1987 placed a limit on the amount of time that a bank may hold funds after a customer has presented a check. Typically, two days is allowed for a check drawn on a local banking institution and three days for non-local banks. In order to comply with the law, banks automated the processes associated with the processing of checks. One of the biggest improvements employed by banks was the use of high speed sorters that automatically scan the checks using a Magnetic Ink Character Recognition (MICR) line imprinted on the bottom of the checks. Using the MICR line, the sorters are able to create a database containing all the information associated with the check (e.g., drawee bank, account, amount . . . ) as well as automatically separating the checks into the previously described bundles. As part of the automatic check processing function, the banks were able to generate an electronic version of the Cash Letter known as an Electronic Cash Letter or an Electronic Cash Presentment (ECP).
FIG. 1 illustrates the process once a transmitting bank 10 has generated the ECP with respect to the checks that it received that day. FIG. 1 represents the process exercised with respect to a single drawee bank 20, but the same process occurs with respect to each drawee bank to which the transmitting bank 10 transmits an ECP. The transmitting institution creates the ECP 15 as described above and transmits the electronic file 15 to the drawee bank 20. This transmission is typically accomplished via a secure communication (e.g., leased line) using Electronic Data Interchange (EDI) format. As previously described, the ECP 15 contains all of the information about each check in order for the drawee bank to post and reconcile the items (the checks).
The standard ECP processing 25 includes posting the item to the account on which the check is written. This is illustrated in the connection between ECP processing 25 and the Demand Deposit Account (DDA) system 30. The process of posting is when the funds are actually debited against the check writer's account and no longer available for use. The funds are actually transmitted to the transmitting institution in an end of day process of known as settlement (not shown).
One end product of the standard ECP processing 25 is an electronic database 35 that contains entries for each item in the ECP. The entries for each item includes the decisions made with respect to the each item (e.g., debited, returned for insufficient funds . . . ) The MICR line information, the date the item was posted to the drawee's account and an Item Sequence Number (ISN). As the items of the ECP are processed in the stand processing procedure, they are each assigned a unique Item Sequence Number (ISN). The ISN is unique for each item and serves as an internal index by which the bank can track the item. After the end of the standard ECP processing 25, the financial processing of the items is essentially completed.
At some point later in the day (or perhaps even the next day), the transmitting bank 10 sends the physical items 40 represented in the ECP to the drawee bank 20. The physical items (the checks) are conventionally known as Paper To Follow items. Upon receipt of the physical items, a Paper To Follow (PTF) process is run to make a legal record of the items, and to justify the entries of the ECP 15.
As part of the Paper To Follow processing, the drawee bank generates a microfilm image of the item for the bank's internal record keeping requirements. In the standard Microfilm process 45, each of the physical items are assigned another unique ISN. The second unique ISN number assigned during the microfilm process is different from the first ISN associated with the ECP entry during the standard ECP processing 25. This second ISN number is physically imprinted on the microfilm containing the item. Because the image is captured on microfilm, there is no way to alter this second ISN to match the first ISN associated with the corresponding ECP entry. The microfilms for the physical items are stored in a microfilm archive 47.
In the proofing process 50, the physical items are matched to items contained in the original ECP. As previously described, each of the ECP items are represented in the database 35. In order to achieve processing efficiencies, conventional sorter systems used in the proofing process 50 require that the physical items are presented in the exact same order as they were found in the ECP 15. Naturally, this causes great heartache if somehow the physical items were dropped and became out of order before the sorting process. The requirement that the items be in the same order stems from the fact that the proofing process is performed in real time. As each of the physical items are matched to the ECP items in database 35, a Cross Reference file 55 is built to correlate the ISNs of the ECP items to ISNs of the physical (now microfilmed) items. After the microfilming 45 and proofing processes 50 are completed, statements 60 are sent to the customer 65. The statements 60 contain the actual physical checks written by the customer 65.
At some point later in time, the customer 65 may have a question on a particular item. For example, the customer 65 may have lost his copy of the check and requires a copy of the check to present to his utility company for proof of payment. In a business environment, an insurance company might require a copy of a claim check that it wrote to one of its customers that is now disputing the payment. Typically, the customer 65 will contact the customer service center 70 within the bank.
In researching the check, the customer service representative 70 first checks the archive 75. Where a bank 20 has established a process 550 for digitally imaging non-ECP items that are presented to it (e.g., on-us checks), those images will be stored in a digital archive 75. However, if the item was processed through the ECP process described above, the image of the check will not be found in archive 75. This is because the process of posting of the ECP items and the process for creating the images associated with the ECP items are separate and distinct from the process 550 of generating the images for non-ECP items. For example, as depicted in FIG. 1, images of the ECP items are and retained via a standard microfilming process 45.
After the service representative 70 has determined that the item is not contained in the archive 75, the representative 75 knows that the check was most likely an ECP item that was microfilmed. One significant problem with searching for the microfilm image is that the microfilm image of the check will not be found on the posting date that the customer sees on his statement. This is because the posting date relates the posting of the ECP item, not the date on which the physical item was processed and microfilmed. In order to find the microfilm image of the check, the customer service representative 70 has to consult the cross reference file 55 in order to determine where in the microfilm archive 47, the image of the requested check can be found. Once found in the archive 47, a copy of the check is generated from the microfilm and is sent to the customer 65. No currently available processes for managing information lends itself to a useful integration of the output from the two processes (one being the output from process 550 and the other being the archival output from the processes surrounding the posting of an ECP item).
The prior art methods described above suffer from several significant drawbacks. The sorting process by the transmitting bank when generating the ECP 15 must essentially be repeated when the drawee bank 20 receives the physical items. The generation of the two ISNs, one associated with the ECP item and one with the microfilmed item, requires the generation of the cross reference file 55 in order to match the two items at a later date. The sorters in the drawee bank 20 require that the physical items be in the same order as they were processed in the sorters at the transmitting bank 10.
It is therefore an object of the present invention to solve at least the above-described problems with the systems and methods of the prior art.